EBRD keeps forecast for Kyrgyzstan 2023 GDP growth near 7%

BISHKEK. May 16 (Interfax) - The European Bank for Reconstruction and Development (EBRD) predicts Kyrgyzstan's economic growth in 2023 will reach 7%, according to the Regional Economic Prospects report published by the EBRD on Tuesday.

In its previous February review, the EBRD gave the same forecast for the growth of the Kyrgyz economy for 2023.

The forecast for 2024 is also unchanged at 7.2%.

In its current review, the EBRD notes that the Kyrgyz economy grew 7% last year, despite a significant drop in gold exports. At the same time, the increase in demand for labor migrants in Russia, the mass relocation of Russian capital and individuals from Russia, and a significant increase in intermediary trade compensated for any unfavorable consequences for Kyrgyzstan due to the events in Ukraine.

Growth continued in the first quarter of 2023. At the same time, there was high external and domestic demand, growth in industrial production of 7.6% in annual terms, growth in the hotel business of 24.1%, retail and wholesale trade growth of 11.8% and growth in road transport of 18.7%. Imports grew 27.2% YoY in January-February due to higher food and energy prices, as well as an increase in re-export activity.

The EBRD also noted an increase in truck imports in the first two months of 2023. The bank believes that this reflects the large role of the country in transit and intermediary trade. In general, real GDP in the first quarter of this year grew 4.6% in annual terms, despite a 34% decrease in net remittances to Kyrgyzstan.

"In the short term, the economy will continue to benefit from expanded re-export opportunities, increased remittances from Russia, and relocation of Russian companies and citizens, including IT professionals and entrepreneurs. Investments in large energy and infrastructure projects such as the Kambarata HPP-1 and the China-Kyrgyzstan-Uzbekistan railway are likely to support growth in the medium term. However, the risks associated with tightening credit conditions and dependence on remittances from the Russian Federation remain," the EBRD review says.

The base scenario for the socio-economic development of Kyrgyzstan, approved by the cabinet of ministers, assumes a rise in GDP in 2023 of 4.5%.